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China’s January crude oil imports averaged 11.12 million bpd, according to energy analytics company OilX. This was up by more than 18 percent, or 1.74 million bpd, from the December average.
Refinery intakes also remain strong, OilX analysts noted, averaging more than 14 million bpd for eight consecutive months now.
China has been the single most bullish factor for oil prices since the pandemic hit. Thanks to the fast recovery of its economy, China has been instrumental in the oil price rebound as the world’s biggest oil importer.
Independent refiners have remained important for overall imports as they accounted for the new refining capacity additions in the country, which were expected to boost its imports. After a slowdown towards the end of 2020 as they used up their import quotas, teapots are once again buying more under their new quotas for this year, boosting China’s total crude imports.
In more bullish news for oil, oil in storage is being drawn down, according to both OilX and another analytics firm, Kayrros.
OilX said in its January imports report that designated storage for the Shanghai INE oil futures was down by 6 million since the end of 2020, and more than 22 million barrels lower than the August 2020 level.
Kayrros calculated that China’s oil in storage stood at some 990 million barrels at the start of February this year, which compared with 856 million barrels this time last year but was down from some 1 billion barrels in September 2020.
China was the world’s largest oil buyer last year as it sought to fill up its reserves with cheap oil amid the pandemic. Refining throughput also hit a record in China last year as major new facilities entered into service. That China is still buying a lot of oil this year, despite higher prices, and that its inventories are falling, is good news for oil producers around the world.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
China has been instrumental in both the surge in global oil demand and in the price rebound amid the pandemic in its capacity as the world’s largest economy based on purchasing power parity (PPP) and also the largest crude oil importer. China will continue to be the real driver of both the global economy and global oil demand well into the future aided by India.
China’s accelerating oil demand surge is manifested by its fast declining oil storage, rising refining throughput and also a decline in the designated storage for the Shanghai INE oil futures by 6 million barrels since the end of 2020 and more than 22 million barrels since August 2020 level reflecting a rising share of the petro-yuan in global oil trade.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London